Often I have clients that do not understand just what they should be doing when they reach the magic age of 65 and have to sort out their options between their individual or group health insurance and Medicare. Information is not provided by insurance companies or Medicare concerning this issue and when time for change comes about many unwittingly make mistakes which may be very damaging, especially if you have an ongoing issue.
Medicare part A; basically inpatient hospital coverage and free starting at age 65, “if you have worked for at least 10 years”.
Medicare part B; helps cover doctor visits and other outpatient treatment. Monthly cost is $110.50* a month, up from $96.40, for new enrollees in 2010 and could be more for individual with income above $85,000 and $170,000 for married couples filing joint tax returns.
Alternatively, Medicare Advantage plans may cost $0 up while providing coverage covers similar to parts A, B & D. Advantage plans may reduce the need for a supplement plan.
Medicare part D; adds Medicare prescription coverage.
Should you sign up for Medicare Parts B and D when you have retiree coverage through a former employer?
- Yes, because work place coverage may become secondary to Medicare for retirees at age 65.
- Yes, if employed but employer has less than 20 employees, Medicare becomes the primary coverage at age 65.
- No, if the employer has more than 20 employees.* That policy remains primary and you do not need to enroll in part B until after coverage ends. Insure that employer is listed with insurance company as having 20 or more employees.
* It is not unusual to find employers making the mistake of not adding employees to their group health insurance. This does cause problems for senior employees and the business owner. If the business has more than 20 employees but they are not covered a senior employee can make a tragic mistake by not enrolling with Medicare.
For the employer; even though your employee is not on your health insurance he is still covered, but guess who is responsible for paying the bill. In addition you could run into problems with the IRS if you are audited.
If you maintain your own coverage, individual coverage ends or becomes secondary at age 65.
If still employed by employer with less than 20 employees you have 8 months to sign up with part B without penalty. Understand that moving to COBRA does not extend the option or the ability to sign up for part B. If you miss the 8 month window you must wait until January and then coverage does not start until July.
Word of warning: in no case will COBRA protect your ability to sign up with Medicare. Once you are no longer employed you have only 8 months, do not miss this
From: WSJ December 30, 2009
*Most Medicare beneficiaries will continue to pay the same $96.40 Part B Premium in 2010. Beneficiaries who currently have the Social Security Administration (SSA) withhold their Part B premium and have incomes of $85,000 or less ($170,000 or less for joint filers) will not have an increase in premium for 201
v New Part B beneficiaries will pay $110.50
- Beneficiaries who do not currently have the Part B premium withheld from their Social Security benefit will pay $110.50.
v Higher-income beneficiaries pay $110.50 plus an additional amount, based on the income-related monthly adjustment amount (IRMAA)
Those of us who selected not to take Social Security prior to this increase or who selected not to have the SSA pay the part B premium are being penalized, without question!
For additional information go to:http://questions.medicare.gov/cgi-bin/medicare.cfg/php/enduser/std_adp.php?p_faqid=2262 or just enter Medicare premium increase rules (in search)
Good luck get prepared, as with taxes and Social Security there is no replacement for knowledge dealing with Medicare is not difficult and a little knowledge goes a long way.
Hubert W. McMinn Jr.
For questions or discussion please contact me by email at hmcminn@plannedassets.com